Morgan Stanley (MS) Nears Earnings, Is The Stock Still Below Fair Value?

Morgan Stanley (MS) heads into this week’s earnings release with investors focused on whether expected 9.3% revenue growth, which is slower than last year, still supports the stock after its recent multi month decline.

Recent price action has cooled. The share price has declined about 11% over the past month and 17% over the last quarter, even though year to date share price return is still positive and the 1 year total shareholder return of 25% points to stronger longer term momentum.

Spot potential peers to Morgan Stanley by scanning a hand-picked set of financially solid opportunities in our list of solid balance sheet and fundamentals (25 results).

The question now is whether Morgan Stanley’s recent pullback, alongside still positive 1 year and multi year returns, leaves enough upside in the valuation to justify taking on the earnings risk from here.

Most Popular Narrative: 16% Undervalued

Morgan Stanley’s most followed narrative places fair value at $226.59, above the last close of $190.02. As a result, the earnings setup is being judged against a built-in valuation cushion that is not especially extreme given the stock’s recent pullback.

The numbers now imply a share price that, in this narrative, treats Morgan Stanley as undervalued, given record firmwide profitability, sizeable CET1 capital accretion, and growing exposure to long-duration wealth, AI financing, and private markets revenue streams.

See why 78 investors see Morgan Stanley as 16% undervalued.

Result: Fair Value of $226.59 (UNDERVALUED)

Still, this narrative can be knocked off course if fee pressure from cheaper ETFs bites harder than expected or if adviser departures start to drag on Morgan Stanley’s wealth profits.

Find out about the key risks to this Morgan Stanley narrative.

Next Steps

Mixed sentiment around Morgan Stanley’s pullback and valuation gap makes this a live debate. Move quickly, review the data, and weigh both the 3 key rewards and 2 important warning signs.

Looking for more investment ideas beyond Morgan Stanley?

If Morgan Stanley is already on your radar, do not stop there. Use the screener to surface fresh opportunities before the crowd catches on.

• Target resilient balance sheets by scanning a curated list of solid balance sheet and fundamentals (25 results) that filters for financial strength and staying power.
• Hunt for mispriced quality with a focused 29 high quality undervalued stocks that highlights companies combining solid fundamentals with potential valuation gaps.
• Build a steadier income stream by reviewing a hand picked 8 dividend fortresses that concentrates on higher yielding payouts.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com